New UK administration proceedings for financial institutions facing liquidiation – which were brought in after the collapse of Lehman Brothers – are to be tested for the first time by the British division of MF Global, the securities firm run by former Goldman Sachs chief Jon Corzine.

MF Global UK, a subsidiary of Delaware-incorporated MF Global Holdings, applied at the UK High Court to enter into a special administration regime. MF Global UK Services, the UK pensions division of the company, also applied for special administration. KPMG’s Richard Fleming, Richard Heis and Mike Pink have been appointed as joint special administrators.

The administration follows the filing for Chapter 11 bankruptcy protection by the firm in New York earlier on Monday.

MF Global’s use of the UK special administration regime is the first time the measure has been used since the UK government introduced it in February this year, according to the Financial Services Authority, and will be seen as a test of its design.

Designed to increase the stability of the financial system, the regime prioritises the return of client money and remaining assets in order to speed up the return of assets tied up in the insolvent estate.

KPMG said the regime would chiefly seek to return margined futures and options exchange transactions and repurchase agreements. It added that it is “likely” that there will be redundancies at the UK operation, which employs 725 people.

The regime also calls for timely engagement with market infrastructure bodies, and to see the rescue of the firm as a going concern or see it wound up in the best interests of creditors.

In the wake of the Lehman Brothers collapse, the Wall Street bank’s counterparties in the UK were unclear as to whether over 840,000 trades would go on to settle, while clients had more than $35bn in cash and assets tied up in the insolvent estate, according to HM Treasury. It said that the impacts on both market confidence and financial stability were severe and that it had drawn up the special administration regime in order to tackle the issue.

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The Wall Street Journal reported that, including its subsidiaries, MF Global has assets as $41.05bn and liabilities of $39.68bn, according to its bankruptcy petition.

Richard Fleming said: “The UK and overseas operations of MF Global UK have ceased trading and the joint special administrators are working with the regulatory authorities, clearing systems and other counterparties in relation to the orderly wind down of the trading operations.”